Recently, Zhao Yaoting, the global market strategist for the Asia-Pacific region (excluding Japan) from Allianz, expressed his views on the Japanese stock market. Zhao Yaoting pointed out that the rise of the Japanese stock market last year attracted some foreign investors, with $40 billion of new funds flowing into the Japanese stock market. However, compared with the $160 billion that flowed into the Japanese stock market at the height of the "Abenomics" in 2013, the amount this year has significantly decreased. Since the beginning of this year, foreign investors have heavily increased their holdings of Japanese stocks, with a net purchase amount of $280 billion. Foreign capital has poured into high-market value stocks such as Japanese automobile manufacturers and electronic companies. Zhao Yaoting believes that the unexpected technical recession in Japan is not the main concern. Due to the unexpected technical recession in the previous quarter, investors worry about whether the outstanding performance of the Japanese stock market in the near term can continue. Following a 3.3% quarterly decline in Japan's GDP in the third quarter of 2023, GDP growth in the fourth quarter further dropped by 0.4% (median estimate was +1.1%). The weaker-than-expected GDP in the previous quarter was due to weak consumption and government spending. However, Zhao Yaoting believes that the slight slowdown in the current Japanese economy is not a cause for excessive concern. With the acceleration of nominal wage growth and the slowdown of CPI inflation in Japan, consumption may soon regain growth. If the economy accelerates again, and with stronger "spring wage" labor negotiations, the Bank of Japan may continue to normalize monetary policy and may raise interest rates in April. Zhao Yaoting expects that after missing out on last year's bull market, foreign investors who have not been interested in Japanese stocks for decades will continue to buy large-cap stocks. However, as the market uptrend continues to broaden, foreign investors may diversify their holdings of Japanese stocks in the coming quarters. For the past year and a half, Japan's core CPI has remained above 2%. For Japanese companies, this means stronger pricing power, leading to robust profit growth by increasing profit margins. Japanese companies have recorded strong revenue growth and operating profit expansion, driving cash deposits to reach new highs. Looking ahead, Zhao Yaoting pointed out that structural forces are driving the performance of the Japanese stock market. Firstly, the Tokyo Stock Exchange has announced a series of measures to enhance shareholder returns, which can further increase foreign investors' interest in Japanese companies. These measures have pushed the total amount of share buybacks by Japanese companies last year to approximately $180 billion, jointly setting a new historical high with annual dividends. Moreover, policymakers have made positive changes to tax-free savings accounts, which are expected to channel approximately $189 billion of household cash deposits into the stock market in the coming years. The influx of investors into the Japanese market is clearly due to positive structural changes, rather than the relative weakness of the yen.